Soap and personal hygiene product giant, PZ Cussons said the bad conditions of its business in Nigeria has adversely affected its profit for the full year.
In its trading update released earlier today, PZ Cussons said during the last few months of the year, performance in the UK has been in line with our revised expectations and, whilst trading conditions in Nigeria have tightened further, expected profit before tax for the full year will be in the range previously indicated, albeit towards the bottom end of the range.
Results in the Group’s other markets remain robust with performance in Australia, Indonesia and the Group’s beauty division ahead of the prior year. Africa In Nigeria, whilst higher oil prices have contributed to increased foreign exchange reserves and a relatively stable exchange rate regime, liquidity has not flowed down into the economy.
In addition, wage inflation has continued to remain well behind the significant cost inflation of recent years, resulting in consumer discretionary income under pressure with subdued buying levels. As a result, the usual peak season uplift has not materialised resulting in volumes, prices and margins being impacted across most areas of the Nigerian portfolio.
There has been no structural change in the landscape of the categories in which we operate with brand shares remaining strong. The lower profitability is therefore a reflection of a weaker overall market with total volumes, prices and margins all lower.
PZ Cussons competes head-on with Unilever and other major soap makers in Africa’s largest economy. Unilever, its biggest compewtitor has also had its fair share of challenges. The company has since sold off its spreads business to KKR which includes Nigerian unit of the business.
